Finding the right property at the right price can take a lot of time and effort. Before signing a contract many purchasers will want to have the building checked and have a lawyer or conveyancer look at the searches and contract. Assuming all is well the contract can be signed – but that is not the end of the process. There are still a number of important considerations after signing the contract.
Once your offer has been accepted, the vendor (normally via the vendor’s sales agent) will serve you with a “Form 1”. This is a statement from the vendor disclosing certain matters about the property, and is based on the statutory searches (State Government, local government and strata secretary –if applicable). It provides details such as zoning, notices from adjoining owners re building works, planning and development approvals granted for the property as well as rates and taxes payable for the property.
Once the Form 1 is served on you, individuals (but not company purchasers) have two (2) clear business days after receiving it to change your mind or “cool off” (ie midnight on the second business day after receiving to change your mind to proceed for no reason). The Form 1 also sets out your cooling off rights and how to cool off should you choose to. If you have any concerns with the property, contract or Form 1, it is vital that you seek advice as soon as possible during the cooling off period. If you do change your mind and would like to cool off, we strongly recommend that you involve your conveyancer or lawyer in that process if there is time.
It is extremely important that you take out property insurance as soon as possible after the contract is signed as most contracts put the property at the risk of the purchaser. If the building is destroyed by a fire prior to settlement it is the purchaser’s problem and the vendor will still expect the purchaser to settle the contract.
If you choose to proceed, your deposit under the contract is payable to the agent’s trust account once your cooling off has expired (ie on the 3rd business day after receiving the Form 1).
Once your deposit has been paid, it is at this stage the conveyancer is provided copies of the contract and Form 1 documents by the agent to start the standard conveyancing process.
So, things consider after signing a contract to purchase property include:
- Take out building insurance for a sum that represents the building’s replacement value and allows an amount to remove the existing building. Make sure the building insurance also includes public risk insurance for an amount of at least $20,000,000 (from the date of signing the contract you are also at risk for anyone that is injured on the property!);
- If you want to have a building or pest inspection you should arrange that before the cooling off period expires;
- If you change your mind for any reason you must serve a cooling off notice on the vendor in accordance with the instructions in the Form 1. We strongly recommend that you seek advice from an experienced solicitor (if time allows);
- Arrange payment of the deposit to the trust account of the vendor’s sales agent;
- Instruct an independent conveyancer to act on your behalf to settle your purchase. Your conveyancer will liase with you, your financiers and the vendor’s conveyancer to ensure that you receive good legal title to the property and that all adjustments are made to the applicable rates and taxes.
For further information please contact Anna on 8362 6400 or email Anna Pantelios. Join our mailing list to receive updates and advice on current issues.